In doing research for Radical Roots, we kept hearing about a dynamic that was central both to the generation that founded the natural food co-ops and co-op activists today: People then as now were disgusted with the exploitation and lack of transparency that is endemic to corporate capitalism, but found it difficult to create alternatives when they could not access capital by typical capitalist methods. Recently, three co-op activists createdCooperative Principal as a new way for people to build the cooperative economy, grow their assets and have fun in the process. We interviewed Cooperative Principal partner Joe Riemann about it.

Radical Roots: Why have you chosen the investment club model?

Joe Riemann: While there’s an interest and almost an urgency for people to be able to invest in things other than the stock market, the reality is that securities regulations really prevent anyone of any kind of modest means, so anyone not an accredited investor, which is the one percent, for lack of a better term, from doing anything interesting. Mostly it’s Wall Street and your 401k and everything going into the stock exchange, and obviously a larger percentage of the population doesn’t want to support that, including myself.

It so happens that there are certain regulations that don’t apply to investment clubs. So as long as you’re actively participating in an investment club - that you aren’t giving your money to someone else to manage and you are the one managing those funds - then a lot of the security regulations sort of go away.

It opens up a lot of possibilities for individuals to come together, pool their money and be able to purchase securities together as an investment club. You wouldn’t necessarily have those kind of same abilities as an individual.

RR: When I think of investment clubs, I think of people just trying to maximize their returns. How does this fit with the cooperative ethic?

JR: Investment clubs themselves are pretty similar in model to cooperatives: democratically run, one member one vote, pooling resources together and sharing ownership of those investments. You’re getting people together, sharing resources and then sharing ownership of the cooperative economy in a new and interesting way.

I think one of the important pieces of the whole model is that it’s almost a social club just as much as it is an investment tool. As we’ve had more conversations both internally and externally we’ve come to realize that’s an important piece that we want to focus in on. How do you make investment and finance fun?

RR: How does this differ from individuals just buying preferred stock in a co-op?

JR: A lot of preferred stock offers have minimum amounts, whether it’s $1000, $5000, sometimes $10,000. As an individual, and certainly an unaccredited individual, having that kind of liquid cash is pretty difficult and unrealistic. But pooling resources together with other people interested in investing in co-ops opens up a lot more options.

In the first investment club, CP 001, as we’re calling it, I’ve pooled my investments together with twelve other people and we have a total of $6000 invested in three different coops. I think that’s pretty cool, because that’s certainly a lot more than I or a lot of the other folks in the club were doing on their own

RR: How does a Cooperative Principal investment club actually work?

JR: The process is seven to fifteen people get together on a periodic basis, so once every couple months or once every quarter. Every month they’re making some kind of investment that’s agreed upon by people in the group, so $25, $50, could be $100, whatever everyone is comfortable with, and then coming together for a couple hours for a meeting. At the meetings they’re identifying things that they want to know more about, like, “We know that these co-ops are doing some kind of capital campaign,” or “Here’s a local co-op, could we invest in that one?” So they’re coming up with ideas.

I’ll walk you through the last club meeting we had. We’d identified wanting to invest in Maple Valley, the multi-stakeholder co-op, and so by that club meeting we had an analysis of it and the club members had a discussion. We take a vote, straight up or down, do we want to make this investment, and another vote on how much of an investment. And it’s all majority vote, even though there’s some members of the club that have more of the total portion of the club,

RR: So you have the local club, but what’s the role of the central Cooperative Principal organization?

JR: The organization Cooperative Principal can provide analysis of different options. A club can say “Hey, we want to see an analysis of x, y, and z,” and by the next club meeting they’ll have an analysis of that co-op. Not a recommendation, because it’s all down to the club deciding what they want to do, but an analysis of both financial and social metrics so that there’s some kind of basis of comparison with other things.

Because there really is no index. There’s no information about what makes it a good investment. I think the whole point of CP, the central organization, is to educate just as much as support this concept of people being able to invest.

I think when it really hits the road the real strength of it will be that it is a national organization with a federation of clubs that will be able to interact with one another and share information.

RR: Is there enough growth in the cooperative sector to need more investment?

JR: Just in the Twin Cities alone almost every natural food co-op is doing some kind of expansion or second store or third store. Across the country there’s both start-ups who are doing capital campaigns to open their stores or existing co-ops that are doing expansions, so we’re seeing that wave of growth. The worker co-op sector has continued to have a lot of start-up growth and a lot of interest in it. You’ve got Madison or New York, all these cities are actually writing into their budget funds to help finance the development of worker co-ops.

RR: You’ve done several presentations about CP at co-op conferences and other events. What has been the response?

JR: It resonates with a lot of what people have been yearning for something, which is how do they invest in co-ops instead of Wall Street? That’s what we hear over and over and over again. So it’s refreshing to hear that it’s not a small amount of people that share this kind of desire.

We’re trying to build the co-op movement and we’re doing it in a couple of different ways, both by building awareness and excitement around coops and this idea of people coming together and owning things together, but also the growth in the finance side the cooperative economy, just as much as the movement.